California Leads the Way for Pay Data Collection and Reporting

With the Equal Employment Opportunity Commission’s (EEOC) announcement that it would abandon current efforts to collect the controversial Component 2 pay data, California has taken the first step in filling the void left behind by seeking to enact a state law requirement to collect employee compensation.

In a purported effort to promote transparency and combat pay discrimination, the California legislature recently passed Senate Bill 973 (SB 973). If signed by Governor Newsom as anticipated, SB 973 would require California private employers with 100 or more employees to submit a pay data report to the Department of Fair Employment and Housing (DFEH) by no later than March 31, 2021, and annually thereafter. Modeled after the federal EEO-1 Component 2 collection form, the state pay data report requires employers to collect aggregate W-2 earnings and report the number of employees in each of the 12 pay bands (spanning from $19,239 and under to $208,000 and over) for the 10 broad job categories (executive or senior-level officials and managers; first or mid-level officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers), classified by race, sex and ethnicity. Employers must also report total hours worked by each employee within a given pay band during the reporting year. Employers with multiple establishments must submit a report for each establishment, as well as a consolidated report that includes all employees.

For the full alert, visit the Faegre Drinker website.